Sinking crypto exchange FTX files for bankruptcy


Embattled cryptocurrency exchange FTX has filed for Chapter 11 bankruptcy, the company announced Friday. CEO Sam Bankman-Fried has also resigned, with John J. Ray III slotted to replace him.
"The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders," Ray said, per CNBC.
News of the filing arrives after quite the "tumultuous week" for FTX, one of cryptocurrency's biggest players, CNBC writes. In just days, the exchange "went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals, and rival exchange Binance ripped up its nonbinding agreement to buy the company." Once an industry star — "widely viewed as one of the most stable and responsible companies" in the "loosely regulated" crypto space — the platform is also now under investigation from the Securities and Exchange Commission and federal prosecutors in New York, adds The New York Times.
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Trouble first began when Binance CEO Changpeng Zhao over the weekend suggested FTX might be in a precarious position financially, and panicked customers rushed to pull their investments from the platform, the Times writes. An overwhelmed FTX was subsequently "unable to meet the demand."
Zhao then agreed to buy the rival exchange "in what amounted to a bailout," only to cancel the agreement after reviewing FTX's financial documents. On Thursday, Bankman-Fried admitted that he "f--ked up, and should have done better." But ultimately, the hole was "too big to fill," writes the Times: "In all, FTX owed as much as $8 billion."
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Brigid Kennedy worked at The Week from 2021 to 2023 as a staff writer, junior editor and then story editor, with an interest in U.S. politics, the economy and the music industry.
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